Portfolio Update May 2020 - Seeing light at end of tunnel?

Portfolio value increases $11.5k from last month to $187k.

This includes capital injection of May's income to nibble UOB.

Reits have continued their recovery after the government announced more details about the phased reopening of Singapore's economy after the Circuit Breaker ends on 1 Jun and dangle the possibility of full reopening as early as end Jun.

Losers like Sembcorp Industries and Starhub continued to fare badly after being kicked out of MSCI index and 25.7% drop in Q1 profit respectively.

SRS portfolio value dips to $64k from $69.6k.

Vested for the ultra long term, I am not worried about the short term volatility as I believe investing in these income producing businesses will continue to yield dividend income while relieving me from paying taxes.

Throughout the crisis, I have stuck to my own game plan of staying vested in the markets, adding to positions and recycling capital when necessary for better opportunities. My last 2 purchases were Frasers L&C Trust and UOB, which were still undervalued intrinsically and I believe they have room for capital appreciation as well as yielding growing dividend income for the long term.

I have depleted my primary war chest and can only inject income from monthly salary into new investment. I have no intention to activate my secondary war chests unless the markets drop more than 40% from the peak to hit new lows. The boat may be over as we see reopening of economies and gradual resumption of businesses. The boat could also come back if economy worsens and new waves of infections surface. I am happy with recovery of the markets as my net worth will continue increase. If the stock market plunged again, I am happy too as I can add to existing positions at discounted prices.

I am looking forward to the end of Circuit Breaker and the future that lies ahead because I believe we will come back stronger and everything will be better!

Thanks for Reading!

Love & Peace,
Qiongster

Aims Apac Reit in Quest of Recovery

Aims Apac Industrial Reit (SGX:O5RU) is the largest component of my investment portfolio.

It is ranked last in my 10 Best Reits in Singapore.

In my previous post before its 4Q 2020 results announcement, the share price was at $1.13 above the 61.8% Fibonacci retracement level. I mentioned that:

"its 20 days MA is closing in on the 50 days MA. If it crosses, the share price may attempt to reach the next intermediate resistance at $1.25, which is at the 38.2% Fibonacci retracement level."

After announcing a decent set of quarterly results showing muted impact to its business and tenants, and being one of the few Reits to be able to pay out 2 cents dividends, its share price is testing the $1.25 resistance today.

The William%R is near but not yet hit -20 to indicate an oversold condition. Though it is able to stay above the 20 days MA trendline, volume is not large. I think it may not be able to clear $1.25 soon. It may range bound between the 20 days MA of $1.18 and $1.25 resistance. However, if it is able to power through $1.25 on high volume and momentum, it will then be able to clear the 100 days MA at $1.28 with ease.

I hope Aims Apac Reit will be able to slowly recover to its pre Covid levels but it will not be an easy feat. Its recovery will depend on the 1Q 2020 and subsequent quarter results.

If it is able to sustain at least 2 cents of quarterly dividends, at a share price of $1.25 will yield 6.4% which is higher than other industrial Reits but no longer as attractive when its share price was lower below $1.20 in Mar to Apr 2020.

Thanks for reading.

Love & Peace,
Qiongster

Nibbled UOB

I have sold off Frasers Centrepoint Trust which I nibbled at 2.07 for some kopi money and have been banging my chest and head as its share price shot up to 2.30. My entry point was at 2.03 followed by a correction to 1.96 and then a surge after news of the end of circuit breaker were released. I decided to sell as my visit to Northpoint City over the weekend reminded me that 2 months of rentals are waived for many of the clothing, entertainment and non-essential shops which are still closed in the malls and its DPU will take a year or so to recover back to above 12 cents. It was a poor trade with poor entry and exit points but anyway that was history so let's move on.

To atone for my sins, I searched for new purchase targets to nibble. Preferably existing solid counters in my portfolio or new great companies. I considered adding CapitaMall Trust at 1.85 but does not make sense as I just added at 1.75 a month ago. I also considered CapitaLand Retail China Trust at 1.29, Silverlake axis at 0.235, Thaibev at 0.66 but none gave me the risk assurance, robustness or shiokness. 

So looking at the state of banks, DBS has recently XD, fell by the 0.66 dividend amount and slowly recovered. OCBC and UOB are still in CD mode and trading at 0.8 times book value. As I already have OCBC in my SRS portfolio, I looked into UOB, did abit of research that it was the only Singapore Bank with growing Southeast Asian presence, particularly in Thailand and Malaysia. With strong conviction that we should own the banks instead of letting banks own our money, I find it worthwhile to start nibble UOB to start a new foray as its Cum Dividend is 0.75 meaning purchasing it at any price below 19.75 will achieve a holding cost of below 19. In the long term, we can be sure that its share price will go back above 25.

I have depleted my primary war chest and will not be adding to my investments in the coming weeks. I am not bothered by the development of pandemic situation and whether the markets will continue to crash or rebound. I will just continue to grind out, stick to my plan and emerge out of the virus stronger than before. Thanks for reading!

Love & Peace,
Qiongster

Ranking My Stock Purchases during Covid-19

Since the market crashed in Feb 2020 due to the global pandemic, I have been gradually buying stocks without fail and fear in the past 3 months. I wanted to analyse which are the better and poor buys and tried to see what lessons can I learn from them.

No	Counter	Purchase date	Entry Price	Sold/Current Price	% Change
1	OCBC	23 Mar 2020	7.87	8.98	14.1
2	Frasers L&C Trust	28 Apr 2020	0.97	1.09	12.3
3	CapitaLand Mall Trust	30 Mar 2020	1.75	1.82	4.0
4	Mapletree Industrial Trust	24 Apr 2020	2.39	2.48	3.8
5	Frasers Centrepoint Trust	12 May 2020	2.03	2.07	2.0
6	SATS	12 Mar 2020	3.69	2.87	-22.2
7	Comfortdelgro	17 Feb 2020	2.09	1.58	-24.4

My best buy is catching OCBC at the bottom on 23 Mar 2020 when after my order is filled at 7.87. The share price continue to slide below 7.80 and languish without any price support till the market closed. On the same day, I saw DBS fluctuate wildly below 17 but I have no spare ammo to buy. Then the following day it gapped up and the rest of the recovery is history. Adding OCBC using dollar cost averaging to my SRS portfolio was a long term plan after topping up my SRS account every year

My second best buy is a recent purchase of Frasers L&C Trust one day before announcement of its 2Q FY20 results, which will confirm the 1H FY20 cleanup DPU amount after its merger with FCOT. I saw the stabilisation of its share price above 0.95 for several weeks, expected the results to be solid, hence decided to perform a calculated bet on its recovery. Afterall, Frasts L&C Trust is doing the same nature of business as Mapletree Logistics Trust which has recovered fast and proven its resiliency.

My third best buy was adding CapitaLand Mall Trust in a planned move to round up my existing units to prepare for merger. So after payday, I just placed my order at 1.75 and it got filled. In subsequent weeks, it share price even plunged below 1.50 but I have run out of ammo to average down further even though it is highly rewarding to capitalise on the irrational behaviour of sellers cutting losses on the future biggest Reit in Sg at distressed prices.

My fourth and fifth best buys involve quick trades that involve buying Mapletree Industrial Trust before its results was announced and buying Frasers Centrepoint Trust after it went XD. The results are earning quick bucks for Kopi money but the returns are not fantastic. In fact, the prices run much higher after I sold them.

My worst buy was Comfortdelgro when its share price was beginning to tank before the Budget announcement in Feb 2020. I was catching a falling knife and speculated on a quick rebound after the Budget as I expected reliefs from the government to assist taxi drivers to drive the share price up. It was a failed speculative move so I have to hold this counter for the long term and ride on the slow but eventual recovery process of land transport, which I believe to be a necessity in a city state.

My second worst buy was SATS during its free fall. Similar to Comfortdelgro, I was catching a falling knife but that was part of my plan to add on to SATS using dollar cost averaging to my SRS portfolio after I top up my SRS account. SATS is a high ROE and great company that I thought can leverage on the long term prospects of a global aviation hub in Singapore and the built up Terminal 5 in 2030. Hence it was a long term play for me but it would be better if I entered below 2.50 instead to have a higher margin of safety.

Lessons learnt
Avoid distressed sectors during a crisis
My poorest purchases came from transport and aviation related companies from the likes of Comfortdelgro and SATS. It was a bad time to buy them at times when we all know they are most heavily impacted by this health crisis. We should target stocks and Reits in sectors that are less affected by the crisis so that their share prices will rebound faster during the recovery and more returns will be reaped.

Speculation involves high risk and the results are same as gambling
Speculation on share price rebounds and shorting of stocks to speculate on share price drops are risky moves that give higher gains or losses. It is not investment in businesses but merely betting on numbers. For long-term investors, I would not recommend doing such things. For short-term traders, it is important to make hedged or calculated risk managed trades to improve on the risk-reward ratio.

Stick to own plan at all times 
It is important to come up with our own investment strategy, deployment of war chest allocation, a buying list of stocks and Reits during a crisis so that we could capitalise on the presented opportunities to reap rewards for the long term. We should enter based on our plan and not gut instincts or greed.

Long term positions give potentially higher returns than short term trades that give quick bucks
Even though quick trades give decent profits for short term swings of a stock share price within a short period of time, the amount earned is very small relative to holding a long term position at discounted prices with high margin of safety. I believe income investors should still stick to the buy and hold strategy, while performing rebalancing of portfolio only when there are good reasons to do so. It is costly and not effective to time the market and make frequent selling and buying.

I hope that we all can learn much from this crisis and do better in our investment journeys for the future. Thanks for reading.

Love & Peace,
Qiongster

Net Worth Surpassed SGD 900K in May 2020

As the stock market continue to recover, my net worth has reached $911k after the latest active cashflows and CPF contributions.

It increased by $12k or 1.3% from Apr 2020 and is the highest ever net worth in my life.

The last time it surpass $900k was in Feb 2020 before the onslaught of global economies and stock markets by the virus pandemic.

I have altogether injected more than $40k into the markets buying the likes of Comfortdelgro, SATS, OCBC, CapitaLand Mall Trust, Frasers Logistics & Commercial Trust and Frasers Centrepoint Trust and completed my shopping spree during this health crisis.

I hope to continue to live frugally, pay off all my debts, income taxes, stay invested and let my net worth charge towards $1 million before May 2021.

Stay home and be safe. Thanks for reading.

Love & Peace,
Qiongster

Nibbled Frasers Centrepoint Trust

After my failed attempt to buy Aims Apac Reit yesterday, my hands are getting itchier.

I am more determined than ever to deploy my spare cash into nibbling some great income-producing assets at current STI level of 2500.

Today I placed orders at 1.78 for Mapletree Logistics Trust, 2.03 for Frasers Centrepoint Trust, 1.14 for Aims Apac Trust (thinking that it would fall after reporting 27% drop in DPU to $0.02) and 2.52 for Mapletree Industrial Trust.

I got a fairly good chance of getting Mapletree Logistics Trust but did not as I saw the big boys using bots to sell automated 300 shares every 15 seconds while accumulating and scooping up many shares between 1.79 and 1.81. I also saw FCT being pumped up from 2.05 to 2.12 mid-day on low volume and then retreated back to 2.05 and below. In the end, my order was filled 2.03 and the big boys continued to scoop up whatever is available below 2.07.

Ever since the share price of FCT plunged from the high of $3.03 to bottom out at $1.66, it has been trending along the 20 MA line and above the 23.6% Fibonacci level at $1.98, which is a short-term strong support. It is unable to clear the 38.2% Fibonacci level at $2.18 after the 2Q 2020 results which saw it reduce DPU by 48.7% and retained some $18m of distributable income to help tide over the crisis for tenants.

I believe that the impact from Coronavirus pandemic has been largely factored into the share price and at $2 levels, we can enjoy around 20 to 30% discount off the 100 day MA between $2.70 to $3 price levels where FCT has been trading for the past year. Also considering that there was a preferential offering at $2.35 in Jun 2019 to raise funds for acquistion of Waterway point and the NAV of FCT is at $2.21, I believe that I am getting a decent value by nibbling some FCT at $2.03.

The short term share price fluctuations do not matter at all because I believe the retail industry will bounce back eventually. FCT will hit more than $2.70 again eventually. It may take 1 year, 2 years or even longer but suburban malls are the lives of HDB city dwellers. In my 10 Best Reits list, FCT is ranked 9th.

My plan is to stay invested at all times and enjoy the journey of building up an income portfolio. This may be my last purchase during this health crisis as my future funds from subsequent few months will be used to top up my mum's CPF retirement account to enjoy tax relief and also to pay off my personal income taxes, insurance annual premiums and credit card bills from hoarding groceries at Fairprice and Giant.

Thanks for reading. Stay home and be safe!

Love & Peace,
Qiongster

10 Best Reits in Singapore

I have shared my take on the 5 Best Reits on SGX previously.

1. Parkway Life Reit (SGX: CP2U)
2. Keppel DC Reit (SGX: AJBU)
3. Mapletree Industrial Trust (SGX: ME8U)
4. Mapletree Logistics Trust (SGX: M44U)
5. Ascendas Reit (SGX: A17U)

Let me continue to share on the 6th to 10th Best Reits. I have excluded the likes of hospitality Reits such as Ascott Residence Trust (SGX: HMN) and CDL Hospitality Trust (SGX: J85) as they are heavily impaired by the current coronavirus situation.

6. Mapletree Commercial Trust (SGX: N2IU)

It owns a S$7B portfolio of properties comprising of the following:
i. Vivocity - Singapore's largest mall located in Harbourfront
ii. Mapletree Business City I & II- an integrated office and business park Grade A building complex
iii. PSA Building - an integrated office and commercial made up of a 40 storey office block attached to Alexandra Retail Centre
iv. Mapletree Anson - a 19 storey Grade A office building in Singapore's CBD
v.  Bank of America Merill Lynch Harbourfront - a 6 storey premium office building

This Reit is the biggest beneficiary from Singapore's Greater Southern Waterfront (GSW) as 5 of its properties are located in this precinct. The government has announced plans to rejuvenate and inject life in the GSW through developments of private and public housing, office space, recreation and park connectors to make it a great place to live, work and play. More than 2000 hectares of land, 6 times the size of Marina Bay are reserved for future development - Keppel Golf Club, Pasir Panjang Power District, PSA City Port and Pasir Panjang Port Terminals.

There is a clear potential growth pipeline for this Reit as it has the first rights of refusal from its parent and sponsor, Mapletree to the following properties in GSW.
i. Harbourfront Centre
ii. Mapletree Lighthouse
iii. St James Power Station
vi. Mapletree Anson
v. PSA Vista
vi. Harbourfront Tower
vii. Keppel Bay Tower

Since IPO, this Reit has been rewarding shareholders with consistent and increasing DPU. Its steady growth through yield accretive acquisitions are testament of the manager's foresight and pragmatism.

Source: Mapletree Commercial Trust's presentation

The impact from current pandemic presents a great buying opportunity as its share price plunged to the lows of $1.50s, a level seen more than 3 years ago. At a share price of $1.90, estimating a conservative dividend per share of $0.080 for FY20/21 gives a yield of 4%. Powered by population growth in the GSW, recovery of tourism to Sentosa island and as an STI Component constituent, there is only one certain direction for this Reit. Northward to the skies!

7. CapitaLand Mall Trust (SGX: C38U)

I am forward visualising CapitaLand Mall Trust becoming the combined entity, CapitaLand Integrated Commercial Trust (CICT) even though the merger with CapitaLand Commercial Trust (SGX: ND8U) has not yet completed by Sep 2020. CICT will be the third largest Reit in the Asia Pacific region owning S$22.9B worth of 10 top notch premium commercial properties and 15 shopping malls. With a market capitalisation of more than S$15B, CICT will overtake Ascendas Reit to become the godly Mega Reit in Singapore. By owning CICT, you will enjoy a stake in the following well-diversified basket of properties:

Commercial Properties
1. Capital Tower, a 52-storey Grade A office tower
2. Asia Square Tower 2, a 46-storey Grade A office tower
3. Six Battery Road, a 42-storey Grade A office tower
4. One George Street (50% interest), a 23-storey Grade A office tower
5. Raffles City Singapore (60% interest), an integrated development comprising a 42-storey Raffles City Tower, 5-storey Raffles City Shopping Centre, 73-storey Swissotel the Stamford and 28-storey Fairmont Singapore and a convention centre
6. CapitaGreen, a 40-storey Grade A office tower
7. 21 Collyer Quay, a 21-storey prime office building
8. CapitaSpring (45% interest), an integrated development with an office tower, a serviced residence, ancillary retail and food centre to be completed in 1H 2021
9. Gallileo (94.9% interest), a Grade A commercial building with ancillary retail and a 4-storey heritage building for office use located in Frankfurt, Germany's prime Central Business District
10. Main Airport Center (94.9% interest), a freehold 11-storey multi-tenanted office building in Frankfurt Airport, Germany

Shopping Malls
1. Junction 8
2. IMM Building
3. Bugis Junction
4. Raffles City Singapore (40% interest)
5. Bukit Panjang Plaza
6. Clark Quay
7. Westgate
8. Tampines Mall
9. Funan
10. Plaza Singapura
11. Jcube
12. Lot One Shopping Mall
13. The Atrium@Orchard
14. Bugis+
15. Bedok Mall

On top of all these, you will get some dessert in the form of an 11% stake in CapitaLand Retail China Trust, indirectly owning another 14 malls spread across 9 cities in China.

The benefits of the merger are explained in my post in CMT + CCT = CICT.

Net Property Income and DPU for CapitaLand Mall Trust have increased every year except for 2017 when Funan was closed for redevelopment.

Source: CapitaLand Mall Trust FY19 Annual Report

For CapitaLand Commercial Trust, Net Property and Distributable Income rise steadily in the past years through strategic yield accretive acquisitions.

Source: CapitaLand Commercial Trust FY19 Annual Report

Occupancy rate for the shopping malls is 99.3% as of 31 Dec 2019 but this may be impacted by the current situation whereby smaller businesses may have to close down if they cannot withstand the loss of income during the 2 months of circuit breaker. The commercial properties currently have an occupancy of above 96%. Rental reversion for shopping malls is at 0.9% and is positive for commercial properties in 2019 despite a sluggish economy.

In terms of performance and growth prospects, it will be very challenging for CICT in the short term which could take up to 1 or 2 years. The relief package and rebates for Apr and May 2020 rentals for tenants will make subsequent quarterly results ugly. Drop in Net Property Income, DPU and negative rental reversions are expected. The merger is expected to be completed by 3Q 2020 and I do not expect any acquisition of properties soon because the gearing for CICT after merger will rise up to 39% but still below the stipulated debt ceiling of 45%.

In the mid term of 2 to 5 years, CICT will have a potential pipeline of exciting and high quality acquisitions from its parent and sponsor Capitaland. Singpost Centre, Ion Orchard, The Star Vista, Changi Airport just to name a few in Singapore. And there is no shortage of shopping malls and commercial properties in Asia and across Europe for injection into this combined Reit by Capitaland.

At share price of $1.80, an estimated dividends of $0.09 per share for FY2020 will yield 5%. In FY2023, a projected dividends of $0.125 per share will yield 6.9%. In the long term, there is a dwindling supply of shopping malls and commercial properties in Singapore hence in the next economy recovery phase, I believe CICT will definitely recover in style and soar to greater heights!

8. Frasers L&C Trust (SGX: BUOU)
Frasers Logistics & Commercial Trust is the combined entity after the merger between Frasers Logistics & Industrial Trust and Frasers Commercial Trust. It has a portfolio of 93 logistics and 6 commercial properties valued at S$5.9B diversified across 5 major developed markets - Australia, Germany, Singapore, United Kingdom and Netherlands.

Source: From Frasers Logistics & Industrial Trust Merger Presentation

93 Logistics Properties

Hermes Augsberg facility and the Kentner facility are acquired after 30 Sep 2019 and not presented above.

6 Commercial Properties subsumed from former Frasers Commercial Trust
1. Cross Street Exchange, a 15-storey commercial office in Singapore
2. Alexandra Technopark, a business park with 2 blocks of building and amenity hub in Singapore
3. Central Park, a 51-storey Grade A office building in Perth, Australia
4. Caroline Chisholm Centre, a 5-storey Grade A office in Canberra, Australia
5. 357 Collins Street, a 25-storey Grade A office building in Melbourne, Australia
6. Farnborough Business Park comprising 14 commercial buildings in London

I like the well-diversified portfolio of logistics, industrial properties and business parks in Australia and Europe, well decoupled from the Singapore economy. Most of the properties run on master lease with 100% occupancy, are freehold and have a long term lease with annual rent uplift. I am not keen of having 6 commercial properties in this Reit, but the top commercial tenant profiles of Australian government, Google and Rio Tinto excites me. The logistic tenant profiles are spread across various industries such as consumer, logistics services, manufacturing and automotives.

This Reit is solid, resilient and defensive because it is geographically diversified in high growth economies, has diverse high quality tenants from widespread industries and the huge number of properties reduce the default and tenancy risk. Its main downside is Forex risk from collecting revenue from various currencies. It is like an 'Ang Mo' version of Mapletree Logistics Trust which is rather Asian flavoured.

In terms of short and long-term growth prospects, it has a right of first refusal to a $5B portfolio of properties to choose from from its parent and sponsor, Frasers Property. At a current share price of $1.08, it yields 6.5% based on $0.070 dividend per share. There is definitely room and potential for their portfolio and share price to grow.

9. Frasers Centrepoint Trust (SGX: J69U)

Frasers Centrepoint Trust owns and invests in 7 suburban shopping malls in Singapore valued at $3.2B. All the retail properties are located on or beside MRT stations and bus interchanges. It is a pure play on Singapore domestic necessity retail spending, F&B and essential services. It also owns a 24.82% share in PGIM ARF which owns another 5 retail malls in Singapore and a 31.15% stake in Hektar Reit that owns 6 suburban shopping malls in Malaysia.

Since IPO in 2006, this Reit has delivered a consistent and steady increase in Net Property Income and DPU for shareholders until this current pandemic which may curtail the DPU for a few quarters in 2020. Occupancy is healthy at 97.3% as on 31 Dec 19 and rental reversion is positive at 5% for 1Q 2020.

Causeway Point, Northpoint City and Waterway Point are the three largest malls in the portfolio leveraging on the population growth potential of these HDB Towns. Key developments in the northern regions of Singapore such as Woodlands Regional Centre and Punggol Digital District, SIT's Punggol Campus, new Thomson-East Coast MRT Line serve as catalysts for this Reit to grow in the mid term future. As the supply of future suburban retail space is set to drop significantly in the future years, retail rentals should continue to grow steadily. Even though e-commerce penetration has affected the need for physical electronics and clothing stores, there is a chunk of tenants in Frasers shopping malls catering to tuition, childcare services, enrichment centres and gyms, which are essential services for nearby residents.

It is currently valuated at $2.08 with a yield of 5.2% based on estimated dividends of $0.11 per share. Fueled by population catchment growth, new MRT links, Singaporean' s liking of food and shopping, I certainly believe this Reit will propel again after the current situation is over.

10. Aims Apac Reit

It is the 5th largest industrial Reit behind the likes of Ascendas and Mapletree in terms of market capitalisation. It owns a $1.5B portfolio of 25 industrial properties in Singapore and 2 properties in Australia.

Australia properties
1. Optus Centre Business Park comprising six 4 and 5-storey buildings and a carpark in New South Wales, Australia
2. Boardriders APAC HQ, a warehouse, office and a retail showroom in Queensland, Australia

Singapore properties
A.Logistics and Warehouse
    1. 8 and 10 Pandan Crescent
    2. 10 Changi South Lane
    3. 11 Changi South Street 3
    4. 103 Defu Lane 10
    5. 56 Serangoon North Avenue 4
    6. 7 Clementi Loop
    7. 3 Toh Tuck Link
    8. 27 Penjuru Lane
    9. 20 Gul Lane
    10. 30 Tuas West Road
B. Light Industrial
    11. 15 Tai Seng Drive
    12. 23 Tai Seng Drive
    13. 135 Joo Seng Road
    14. 1 Kallang Way 2A
    15. 1 Bukit Batok Street 22
C. General Industrial
    16. 26 Tuas Avenue 7
    17. 2 Ang Mo Kio Street 65
    18. 61 Yishun Industrial Park A
    19. 541 Yishun Industrial Park A
    20. 8 Senoko South Road
    21. 51 Marsiling Road
    22. 8 Tuas Avenue 20
    23. 3 Tuas Avenue 2 (Under Development)
D. Business Park
    24. 1A International Business Park
E. Hi Tech
    25. 29 Woodlands Industrial Park E1

This Reit rewards long-term shareholders with stable and sustainable DPU of above 10 cents per share every year even though there is limited growth in DPU and Net Property Income.

The occupancy in Singapore properties is 89.4% as at 31 Dec 2019, which is on par with JTC industrial average of 89.2%. The drop in occupancy is due to conversion from master leases to multi-tenancy leases at 1A International Business Park and 20 Gul Way. While rental reversions have been negative at 1.92% as of 31 Dec 2019, this Reit has undergone asset enhancement initiatives to unlock on its untapped gross floor area of its properties. Recent strategic moves have seen this Reit acquiring freehold property in Australia with long master tenant i.e the Board Rider APAC HQ and undergoing design-and-build redevelopment of 3 Tuas Avenue 2 into a versatile ramp-up industrial facility for a global medical device company who will be the master tenant for an initial 10 years lease.

Even with limited growth and absence of huge potential, I believe this is an undervalued and well managed small industrial Reit in relative to other midgets such as Cache which is renamed to ARA LOGOS, Sabana, ESR and Soilbuild Reit which are all in shit one way or another.

Besides providing stable returns, this Reit is a potential acquisition target for takeover by ESR and possibly other giants like Mapletree for reasons due to its fragmented shareholding structure and access to untapped gross floor area as mentioned by DBS Research.

Valuated at a market share price of $1.18, it yields an attractive 8.4% based on a conservative dividend of $0.099 per share. Since the branded industrial Reits are priced at a premium with squeezed yields, this unbranded industrial play still offers immense value, presents steady returns and a decent opportunity for an "en-bloc" windfall, it is a matter of time before this ugly duckling evolves to a swan.

Disclaimer: I am vested in 5 of the 10 Best Reits mentioned and my opinion may contain biasness. This sharing is not a Buy Recommendation for any of the Reits. Investment in Reits can result in huge capital losses. Do your own due diligence before any investment.

Anyway, thanks for reading.

With Love & Peace,
Qiongster

Tried to add Aims Apac Reit but failed

After my previous 2 successful stints in Mapletree Industrial Trust (5% Gain in 1 day) and Frasers Logistics & Commercial Trust (+10% Gain in 1 week), I became greedier.

In what could possibly be my last purchase during Covid-19 sales, I identified Aims Apac Reit (SGX: O5RU) as a value and income play. It is currently the largest holding in my portfolio which already pays me more than $8k of dividends and I decided to add more and placed buy orders at $1.13 - 1.15 today but none get filled as the price inched up instead.

Stagnated and converging sideways after 2 waves of rebounds to land above the 61.8% Fibonacci retracement level of $1.13 from the peak of $1.45 for close to a month, its 20 days MA is closing in on the 50 days MA. If it crosses, the share price may attempt to reach the next intermediate resistance at $1.25, which is at the 38.2% Fibonacci retracement level.

The William%R is at the brink of breaching -80, still indicating oversold status. The last time when its William%R breaches -80 was in mid Mar 2020 when the share price hits $0.90, indicating severely oversold status and the best time to buy.

As Aims Apac Reit will be announcing its Q4 2020 results on 12 May 2020, I think this may be the catalyst to fuel its rebound off the current support. I am happy to hold on to my existing investment at yielding close to 10% for $0.10 annual dividends based on an average holding cost of $1.06 and look forward to participate in the next Dividend Reinvestment Plan.

Thanks for Reading! I will be sharing my opinion on the 10 Best Reits in Singapore soon. Stay tuned!

Love & Peace,
Qiongster

How to live your life free?

To be free, one has to be wealthy financially? Not true. To be free, one can be debt free but not necessarily wealthy. We must not get ourselves into debts, especially credit card debts. There are so called healthy debts such as home mortgage. Although mortgage helps to serve the "healthy" purpose of owning a home, but I feel skeptical that people are trapping themselves to own a home. I also do not favour in leveraging to invest in stocks, CFDs and derivatives because the risks amplified in tandem with profits and losses.
When we are free from debt and heavy liabilities, we will be able to sleep with a peace of mind everyday.

To live a free life, one must be appreciative of our nature and not taking for granted the free elements in life to live. Oxygen we breathe is free. Love from family and friends is free. Water is sort of free. Knowledge is free, though education is not. We do not need to receive education in order to learn and upskill.


To be free, we should keep ourselves healthy and fit so that our bodies are physically free from ailments and the doctor. Keeping fit by exercising regularly is also free. It just takes commitment and discipline to lead a fit lifestyle.


There are so many ways to lead a free life. We should live our lives free from worries, sicknesses, debts, pain and sorrow. Do you agree?


With love & peace,
Qiongster

Lonely or Solitude when fighting battles alone?

As an investor, an employee, a person, a man, a woman, a human, an introvert, sometimes we feel lonely or lost our sense of direction. We should learn to harvest the strength of solitude and be Fearless instead.

I am at Peace alone. Needing no attention. No recognition.
And still I THRIVE...Believe in yourself.
It will all come good in the end.

Those who fly alone have the strongest wings. Those who walk alone have the strongest direction.

Let me share a very motivational and inspirational video from Fearless motivation.com

I had to learn to fight alone. And because of that I am Strong alone.
I AM STRONG. FULL STOP.

With love & peace,
Qiongster

Starhub on its way to recovery?

Last quarter, I blogged about Shit to Gold - Starhub on its way to recovery. Yesterday, Starhub announced a business performance update for Q1 2020. Hence, I decided to continue track Starhub's progress, especially during this difficult time amidst a virus pandemic.

Overall, the performance displays the immense challenges facing the telco business but there is some consolation from a slight improvement and stabilization in the financial position of Starhub.

Highlights:
Revenue decreases 15.2% to $506.2m
Q1 2020 Net Profit decreases 25.7% to $40.2m
Q1 2020 Net Profit actually increases 20% q-o-q from $33.3
Q1 2020 Free Cash Flow increases to $118.9m
Continued declines in Revenue and ARPU for Mobile, Pay TV and Broadband
Continued growth in Revenue from Enterprise and Cybersecurity
Received 5G license from IMDA on 29 Apr 2020
Financial reporting is changed from quarterly to bi-annually so dividends payout will no longer be quarterly

Having shared before, Starhub is one of my initial investments when I started to build a long-term investment portfolio. At that time, telcos were defensive businesses paying good dividends however with the emergence of more competition from virtual mobile operators offering cheaper mobile and broadband services, and evolution of Pay TV landscape to online streaming such as Netflix, the main business of telcos have eroded and margins get squeezed.

If Starhub is able to maintain a free cash flow of above $200m for FY2020, they can sustain paying a dividends of 9 cents per share. However, I feel that if they further cut their dividends to 6 cents per share, they would be more comfortable. I have almost write off this telco investment and no longer places high hopes on Starhub's recovery.

In fact, I have sold off my Singtel (SGX: Z74) shares in Nov 2020 and switched to Ascendas Reit (SGX: A17U) when the latter announced the acquisition of 30 business parks in US, which I believed will have more growth in the future than Bharti Airtel in India. It was a strategic rebalancing move that I was happy to make.

In the near future, the prospects of enterprise and cybersecurity business in Singapore still seems rosy but they are not enough to offset the wading main mobile, Pay TV and broadband business.
The acquisition of 5G license should mark the beginning of a new digital 5G era in Singapore and the region. Telcos should need to pump in more Capex expenditure and it will be a long journey before 5G starts to bear fruits.

I still believe that the route to recovery of Starhub will take at least 5 to 10 years. It will continue paying dividends but there is a decent possibility of further cuts in the dividends. I will continue holding it but I am also contemplating cutting losses and shift the investment into more resilient assets such as Mapletree Industrial Trust (SGX: ME8U) and Frasers Logistic & Commercial Trust (SGX: BUOU) which I mentioned in the following recent posts.

Nibbled Mapletree Industrial Trust but sold it off after results announcement

Addition of Frasers Logistics & Commercial trust

Thanks for reading.

Love & Peace,
Qiongster

A solid and resilient business trust that I did not add nor sell since IPO

Before the IPO of NetLink NBN Trust in Jul 2017, there was a bookmaking process in which institutional firms are allocated shares before the general tranche was offered to the public. My broker from UOB KH emailed and asked clients to bid for it.

A summary of the prospectus lodged in Jun 2017 attracted my attention.

·         Critical infrastructure enabling Singapore’s Next Gen NBN
·         Resilient business model with transparent, predictable and regulated revenue stream
·         Sole nationwide provider of residential fibre network in Singapore, an attractive market with high demand for fibre broadband services
·         Well positioned to benefit from growth in the non-residential segment as the independent nationwide network provider
·         Well positioned to capitalise on growth in connected services including Singapore’s Smart Nation initiatives
·         Extensive nationwide network affording natural barrier to entry
·         Highly scalable operations and credit strength support unitholder returns
·         Experienced management team with proven track record

SYNDICATE:
·         Joint Global Coordinators and Issue Managers: DBS, Morgan Stanley and UBS
·         Joint Bookrunners and Underwriters: DBS, Morgan Stanley, UBS, BAML, Citi, HSBC, OCBC and UOB

OFFERING PRICE RANGE: S$0.80 – S$0.93 per Unit

BASE OFFERING SIZE OF 2,898,000,001 units (appx $2,318.4m to $2,695.1m):

·         Public offer of up to [S$250m]
·         Over-allotment option (OA) of up to approx. S$100m: approx. 107.5m units to 125m units

TOTAL UNITS OUTSTANDING, POST OFFERING (ASSUME FULL OA OPTION EXERCISED): 3,971.5m units to 3,989m units

FORECAST DISTRIBUTION YIELD
·         FP2018E: 4.73% to 5.50% (annualized);
·         FY2019E: 4.99% to 5.80%
All distributions are exempt from Singapore tax for all investors

Lured by the prospect of owning a monopoly business spinoff from Singtel, riding on the waves of digital transformation era, I gladly submitted my bid offer.

In the end, the IPO price was at the lower end of $0.81 and I was abit disappointed to pay the higher brokerage fees of more than $40 to get the guaranteed shares of a monopoly business instead of $2 admin fee at the ATM.

For a period of time after IPO, this counter is a lacklustre laggard. Falling below the IPO price and trading sideways mostly. Then after more big boys initiated coverage of it, the share price began to climb steadily.

Fast forward 3 years, after collecting a few rounds of dividends, my net cost per share of NetLink Trust is only $0.71. This is not taking into account the coming dividend of 2.53 cents which is just announced today. Its market share price is 1 today.

In its Q4 FY20 results, revenue increased by 5.2% to $92.4m. EBITDA dropped 48.1% due to writing off a $15.4m project cost of a discontinued IT system. Nonetheless, its revenue and EBITDA for FY20 still increase by 4.7% and 4.3%. Most importantly, DPU increase 3.5% YoY to 5.05cents at a share price of $1 today yielding 5.05%.

Operating cashflow increased from $229.6m in FY18 to $262.5m FY19. With a total outstanding shares of 3.9B, there is sufficient to cover the $197m for dividends of $0.0505 per share. I believe that the dividends are sustainable at least for the near future.

I am happy to hold on to my shares since IPO at net cost of $0.71, yielding 7%. However, I would not want to pay more than $0.90 for a yield of below 5.5% as there are more interesting Reits and banks that yield higher.

Thanks for reading!

Love and peace,
Qiongster

5 Best Reits In Singapore

I am sharing on the 5 best Reits in Singapore based on stability, growth, risk and resiliency. I thought they will be great for any investment portfolios. However, being best does not mean that we should buy them now because their prices come at premium. Buying branded stuffs at high prices does not give much financial sense. DYODD.

1. Parkway Life Reit (SGX: C2PU)
It owns 53 properties worth S$1.96B including hospitals and medical facilities across Singapore (Mount Elizabeth, Gleneagles and Parkway East Hospital), Malaysia (MOB Specialist clinics in KL) and Japan (1 pharmaceutical distribution plant and 48 private nursing homes). These countries have ageing population demographics displaying growth in needs for healthcare services.
It is resilient and defensive in nature.
Its Japan's properties have a long WALE of 12.6 years. It runs master triple net lease terms of 15 years for the 3 local private hospitals, with option to renew another 15 years after Aug 2020. Its portfolio of nursing homes are run by 26 nursing home operators, with backup operators in place to minimise operator default risk.
It has never ask for money from retail and institutional shareholders through rights offering or preferential offerings  since IPO inception.
It is one of the only two healthcare Reits listed on SGX. It's 2nd lowest yield among all Reits implies that it has one of the lowest risks.
With increasing DPU, net property income and strong financial metrics, the main risks can be attributed to forex, default risk growing competition in healthcare business.
It is valuated at 1.7X book value at a yield of 4% at share price of $3.24 on 5 May 2020.

This Reit is on my watchlist and I will buy when the price is $3 or below, at closer to 1.5X book value and 4.5% yield.

2. Keppel DC Reit (SGX: AJBU)
It is the first and only pure data centre play on SGX riding on the waves of technology forefront, buoyed by the digital era of rapid cloud adoption, smart technologies, big-data analytics and 5G deployment. It owns 17 data centres valued at S$2.6B across 8 countries.
It has enjoyed robust and tremendous growth in portfolio since IPO. 12 out of 17 assets are fully leased. WALE is at 8.6 years, providing predictable steady income for long term. In 2019, the new leases were on 12.5 years and many are on triple net master leases.

Like PLife Reit, while its DPU and net property income have steadily increased along with other strong financial metrics, the main risks faced can be mainly attributed to forex and growing competition in data centre business.

It is currently overvalued at 2.0X book value at the lowest yield of 3.9% among all Reits at share price of $2.34 on 5 May 2020.

3. Mapletree Industrial Trust (SGX:ME8U)
It has the fusion of a pure Industrial Reit and Data Centre Reit characteristics. Its S$5.4B portfolio consists of 87 industrial properties in Singapore and 27 data centres in North America. Its resilient portfolio enjoyed steady growth and advanced towards data centres in recent years.
The WALE is 4.2 years and weighted average tenor of debt is 4.7 years.

Its steadily increasing DPU and net property income are very impressive and has generated more than 220% of returns for a shareholder who hold it since IPO. This is definitely a long term Reit for any income portfolio. However, downside risks include default risks caused by economy recession, large dependency on Singapore industrial sector, increasing leverage and USD Forex rate.

Its valuation is at 1.6X book value at a yield of 5.2% at share price of $2.57 on 5 May 2020.

4. Mapletree Logistics Trust (SGX: M44U)
It is a pure Asia logistics toy owning a well diversified of 143 logistics properties valued at S$8B across Asia in Singapore, Malaysia, Hong Kong, China, Japan, Australia, South Korea and Vietnam. Logistics operations are resilient in nature and boom during times of crisis such as the current pandemic as supplies of good and stockpile of unsold and transported products all require storage facilities.

Since IPO inception more than 10 years ago, its Net property income and DPU has rarely seen any dip. Through DPU accretive acquisitions strategically, its portfolio and income grew in tandem to reward shareholders consistently.

At a valuation of 1.3X book value at a yield of 4.5% at share price of $1.84 on 5 May 2020, there is still room for the share price to grow but it offers very little safety margin as it goes higher.

5. Ascendas Reit (SGX: A17U)
The King of Industrial Reits or rather the God of S Reits with the largest market capitalization of more than S$10B needs no further introduction. A $12.8B portfolio with 38 properties in UK, 28 Business Parks in US, 99 in Singapore and 35 in Australia.

Similar to its Mapletree disciples, its DPU and Net property income rewards from a defensive and resilient portfolio rewards long term shareholders with steady and consistent passive income.

Some downside risks include negative rental reversion, dropping occupancy due to the impact of this pandemic affecting smaller tenants that suspend operations, and high concentration of industrial properties in Singapore.

At share price of $2.94 on 5 May 2020, it has a book value of 1.3X and yield of 5.4%. There is still potential for further upside in its share price and room for more acquisitions in the future.

I hope the above provides a good overview of the best S Reits in my opinion. I intend to share the next 5 best Reits next week. Stay tuned. Thanks for reading! 

With Love & Peace,

Qiongster

How to manage your own life like a company?

An individual can file for bankruptcy if he or she cannot repay debts of not less than S$15,000 to a creditor, just like how a company can become insolvent if it is unable to repay debts amounting to S$10,000 within 21 days as requested by a lender, creditor or bank.

Hence I believe it is important that we  manage our financial health and lifestyle like a company business and operations. Let me illustrate how to run your life like a company.

1. Revenue
The salary or monthly income we bring in from employment or own work is the revenue from sales of the precious commodity of our time, remuneration of our efforts or skills to our employer or customers. Generally, we would want to increase the income by performing well for that pay increment, promotion, get more sales or perhaps clock more overtime work for OT pay.

However, if we partake in side hustle, i.e blogging, Youtubing, giving tuitions, MLM, deliver Grabfood etc, own extra properties or investments, we can have more sources of revenue from additional pay cheques, collecting rents, dividends or interests.

2. Expenses
Our spendings on food, groceries, clothes, transport, housing are akin to a business expenditure. It is crucial to keep them low and get the most bang out of every buck in order to boost our net income, which is Revenue minus off Expenses. Subscribe to newsletters and alerts and be resourceful to know the current latest promotions and deals of online shopping and ecommerce apps will help. Using cashback or miles card for spendings will allow increase of account receivables in the form of cash rebates or miles reward for travels in future.

3. Cashflow
Managing cash inflows and outflows is very important to sustain one's financial well being. Cash is king after all. We do not want to be caught in a situation of being unable to pay for bills, pay our children school fees or give our parents allowances.

We must create a budget and monitor it tightly to allocate our incoming cash flows on repaying our short term and long term debts and liabilities well, at the same time able to pay for all the purchases. Furthermore, contribution to warchest and emergency funds are not mandatory like CPF contributions but it is a good habit to have. This will greatly help in our investment objectives.

4. Balance sheet as Net Worth
Tracking of our net worth is similar to how a company reports its balance sheet, which clearly states its Assets, Laiabilities and Equity. We should also list down all our personal assets i.e cash, property, collectibles, investments, financial assets and perhaps depreciated cars, watches and wines even. Then track all our liabilities and debts from loans, credit cards etc. The difference will be our net worth, the equity portion of a business.

4. Capex Expenditure or Investment
For every purchase of goods and stuffs more than S$1k such as gadgets, laptops, new phones, it is important we do a Cost Benefit and Needs analysis before we commit. We need to ensure that every item we purchase will benefit our lifestyle by increasing our productivity or improve our standard of living. For purchases or sales of even greater value items such as properties or stocks, we need to go through a systematic thinking process and comprehensive evaluations before taking firm actions.

5. Build relationships with partners, stakeholders
We need to build rapport with people we interact with for our own entity to function well in the society. Dealing with colleagues and bosses tactfully in the workplace. Treating your subordinates or customers with respect. Showering love and care for your family members and pets. Helping the less fortunate people and animals in the society are ways to build a holistic and well-rounded relationships.

6. Reputation
As part of marketing and community engagement efforts, we can consider leveraging on available social media platforms such as LinkedIn, Facebook, Instagram, YouTube, forums, online communities, interest groups, blogs to showcase our skillsets, talents and share thoughts and ideas to the world.

I am just sharing a wild thought that came to my mind during the circuit breaker amid this pandemic. Feel free to give any comments and feedback. Thanks for reading!

With Love & Peace,
Qiongster